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Winners and Losers of Netflix's Aborted Qwikster Plan

Reed Hastings
Justin Sullivan/Getty Images

THR analyzes who came out ahead after the beleaguered company changed course on its proposed offshoot.

This story first appeared in the Oct. 21 issue of The Hollywood Reporter.

Customers may have grumblingly endured a 60 percent price hike, but asking them to arrange their DVD queue at some website called Qwikster was too much. So after hearing the complaints, Netflix dropped its spinoff gambit Oct. 10, less than a month after announcing it.

Qwikster was to have been the name given to the Netflix DVD business, which would also begin renting video games, and it was going to operate separately from the streaming business, which would retain the Netflix moniker. But in a blog post, CEO Reed Hastings announced its quick demise. "This means no change: one website, one account, one password -- in other words, no Qwikster," he wrote.

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Judging from comments at the blog, users rejoiced, but investors didn't know what to think, so the stock jumped higher shortly after the news, then sunk to a 52-week low, then recovered a bit before ending the day's trading down 5 percent. Not a good sign, considering the Nasdaq rose 3.5 percent the same day, with every other major entertainment stock participating in the rally. (The stock lost another 2.7 percent Oct. 11.)

Analysts, too, seemed confused. Example: Tony Wible of Janney Capital Markets upgraded the stock the day Qwikster died, while Michael Pachter at Wedbush Morgan downgraded it. In the middle was Barton Crockett of Lazard Capital Markets, who kept his rating at "neutral," though he praised the dumping of Qwikster. "We saw the decision to force consumers to a new website with a new, hokey name as likely hastening the decline of DVD by mail, still used by 14 million of Netflix's 24 million subscribers," Crockett wrote. "So, clearly, abandoning the name change is positive."

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One person who no doubt is disappointed that Netflix, a $6 billion company, won't be launching a newfangled product called Qwikster is one Jason Castillo, proprietor of the @Qwikster Twitter account who was allegedly fielding acquisition offers. Last THR heard, Castillo had turned down $1,000 for his Twitter handle and was angling for ongoing payments for as long as Qwikster existed.

Turns out, that wasn't very long.